Anil Agarwal on Vertical Integration

In the mid-1970s Agarwal traded scrap metal, sourcing it from cable companies across Indian states and reselling in Mumbai. In 1976 he acquired Shamsher Sterling Corporation, an enameled copper manufacturer, with a bank loan, then in 1986 set up a jelly-filled cable factory, founding Sterlite Industries — the forerunner of today's Vedanta.

Sterlite became India's first private-sector copper smelter and refinery in 1993, then in 1995 acquired the long-shut Madras Aluminium from BIFR. The expansion was driven by a simple insight: cable margins were hostage to copper and aluminum prices, so Agarwal decided to manufacture the metals himself rather than buy them — a textbook vertical integration thesis.

The bullishness on Indian natural resources was unqualified: India imports 85% of its oil, all copper and all gold despite, in Agarwal's framing, having geology superior to China but producing only 6% of China's output. He estimated India's import drain at roughly $400 billion annually — money he argued should be circulating domestically if resources were properly opened.

In a BCG conversation, Agarwal framed Vedanta as the product of a relentless search for undervalued assets combined with lean operations. From selling scrap metal in the 1980s, he migrated to telephone cables after buying a small industrial plant at a discount, then moved into copper only to lock up steady input supply for the cables — each step a calculated fix to a margin problem in the prior one.